Sex hormones play a central role in the development of breast cancer. Sex hormone-binding globulin (SHBG) modulates the bioavailability of circulating sex hormones and regulates their signaling system in the breast tissue. We evaluated the association of a common functional polymorphism (Asp327Asn) in the SHBG gene with breast cancer risk in a population-based case-control study (1,106 cases and 1,180 controls) conducted in Shanghai, China. The variant Asn allele was associated with a reduced breast cancer risk in postmenopausal women [odds ratio (OR), 0.73; 95% confidence interval (95% CI), 0.53-0.99], but not in premenopausal women (OR, 1.03; 95% CI, 0.82-1.27). The protective association was much stronger in postmenopausal women with a low body mass index (BMI; OR, 0.46; 95% CI, 0.29-0.75) or waist-to-hip ratio (OR, 0.51; 95% CI, 0.32-0.83) than those with a high BMI or waist-to-hip ratio (P for interaction < 0.05). Furthermore, the association was stronger for estrogen receptor-positive (OR, 0.64; 95% CI, 0.42-0.98) than for estrogen receptor-negative breast cancer (OR, 0.85; 95% CI, 0.50-1.45). Among postmenopausal controls, blood SHBG levels were 10% higher in carriers of the variant Asn allele than noncarriers (P = 0.06). Postmenopausal control women with the Asn allele and low BMI or waist-to-hip ratio had 20% higher SHBG levels (P < 0.05). This study suggests that the Asn allele in the SHBG gene may be related to a reduced risk of breast cancer among postmenopausal women by increasing their blood SHBG levels.